Assigning Your Pre-Sale Contract in BC: Developer Consent, CSAIR and Taxes

Plans change between signing a pre-sale contract and completion, which can be years later. A new job, a growing family or a change in finances may mean you need to sell your place in line before the building is finished.

Selling a pre-sale before completion is usually done by assigning your purchase agreement. It is a legitimate option, but it comes with developer rules, provincial reporting and several layers of tax. This guide explains what to expect.

What an assignment is

When you sign a pre-sale contract, you agree to buy a strata lot from the developer once the building is complete. An assignment transfers your rights and obligations under that purchase agreement to someone else, the assignee, who then completes the purchase in your place. The assignee usually pays you back your deposit plus any agreed profit.

The Real Estate Development Marketing Act defines an assignment broadly, as a transfer of some or all of the rights, obligations and benefits under a purchase agreement for a strata lot, including later transfers down a chain.

Step one: developer consent

Your purchase agreement controls whether you can assign at all. Under section 20.3 of the Act, a developer that permits assignments must include terms in the purchase agreement that:

• prohibit any assignment without the developer's prior consent;
• give notice that the developer will collect information and records from the parties before consenting; and
• require all proposed parties to provide that information.

Some developers do not allow assignments, and many that do attach conditions, such as an assignment fee, a restriction on advertising the unit, or a requirement to use their assignment form. Read those clauses before you list or sign anything. Also check whether you stay liable under the original contract if the assignee does not complete.

CSAIR: the Province's assignment register

Under section 20.3 (2), a developer must not consent to an assignment until it collects prescribed information from each party, including identity, contact and business details and the terms of the assignment. After consenting, the developer must collect a copy of the signed assignment agreement. Section 20.4 requires the developer to file this information with the administrator designated under the Property Transfer Tax Act.

This is the Condo and Strata Assignment Integrity Register, or CSAIR. According to the Province, it covers assignments of purchase agreements entered into on or after January 1, 2019, for condo and strata lots across BC. The information is used to check that the correct property transfer tax is paid, and is shared with the BC Financial Services Authority and the Canada Revenue Agency so assignments are reported and taxes assessed.

The practical message: assume your assignment profit is visible to the tax authorities.

The BC home flipping tax

The Residential Property (Short-Term Holding) Profit Tax Act, known as the BC home flipping tax, applies to dispositions on or after January 1, 2025. Its definition of taxable property includes a right to acquire a beneficial interest in residential property, which covers a pre-sale contract.

• Under 730 days. Tax applies if you dispose of the property less than 730 days after you acquired it.
• Rate. If you held it for less than 366 days, the tax is 20% of net taxable income. Between 366 and 729 days, the rate falls on a sliding scale under section 9 (2).
• Return. Under section 31 (3), you must file a return within 90 days after the date of the taxable transaction.

The Province's guidance says the day you acquire a pre-sale contract is generally the date you pay for the contract, and the disposition date is generally when you receive money from the assignee. Exemptions are limited for pre-sale contracts. Our guide to the BC home flipping tax explains the tax in more detail.

Income tax on your profit

Assignment profits are reportable income. Under the federal flipping rule in sections 12 (12) to (14) of the Income Tax Act, a right to acquire a housing unit in Canada that you held for less than 365 consecutive days is generally treated as business inventory, so the profit is taxed as business income and any loss is denied. There are exceptions for listed life events, such as a death in the family, a relationship breakdown, serious illness, an eligible relocation or an involuntary job loss.

Outside that rule, whether your profit is business income or a capital gain depends on your facts. This is a question for your accountant before you sign.

GST on the assignment

Section 192.1 of the Excise Tax Act deems the assignment of a purchase agreement for a new house or condo unit, entered into with a builder, to be a taxable supply for GST purposes. GST applies to the consideration for the assignment, but the amount that reimburses your deposit is excluded only if the assignment agreement says in writing what part of the price is attributable to the deposit.

That drafting detail matters. An assignment agreement that simply states one total price may expose the full amount, including the deposit refund, to GST. Who collects and remits the tax, and whether you need to register, depends on your situation and should be confirmed with your tax adviser.

Putting it together: a checklist

• Read the assignment clauses in your purchase agreement and any developer assignment policy.
• Confirm the developer's consent process, fees and timing.
• Gather your purchase documents and deposit receipts, and note the dates you paid.
• Have the assignment agreement drafted or reviewed so the price, deposit reimbursement and GST are clearly stated.
• Speak to your accountant about the BC home flipping tax, income tax and GST before you sign.
• Diarize the 90-day BC home flipping tax return deadline if it applies.

If you are still deciding whether to keep the unit, our guide to completing a pre-sale condo covers what to expect at completion.

Thinking of assigning your pre-sale? Review the contract and the tax picture first

Our real estate lawyers can review your purchase agreement and the developer's assignment terms, prepare or review the assignment agreement, and coordinate with your accountant on the BC home flipping tax, GST and income tax questions before you sign.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.